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News release

New York

Large Midtown Deals Drive Down Class A Vacancy Rates at Midyear 2017

New leasing at Hudson Yards fuels boost in Midtown Class A rents

New York, July 10, 2017 — Midtown's Class A vacancy dropped to 11.2 percent at midyear 2017, according to JLL, driven mostly by the ongoing success of Hudson Yards/Manhattan West.

"Large tech — and increasingly the technology divisions of the financial and insurance industries — remain in growth mode and those tenants tend to look west and south," said Tristan Ashby, Vice President and Director of New York research. "West Side — and now far West Side — locations have become increasingly desirable as many principals and employees live in Central Park West, Chelsea, Hell's Kitchen and other adjacent neighborhoods."

Fifteen of the 20 top leases in Midtown year-to-date have been west of Fifth Avenue. The two largest transactions for the quarter were HSBC USA NA renewing 548,000 square feet at 452 Fifth Avenue and JPMorgan Chase & Co. taking 305,365 square feet at 5 Manhattan West.

The strong leasing activity drove Midtown Class A average asking rental rates up to $83.19 per square foot in the second quarter of the year, while overall rates remained unchanged.

Despite the strong quarter, large blocks of available space will continue to loom over Midtown for the next few years, with upcoming availabilities at 550 Madison Avenue; 425 Park Avenue; 1100, 1114 and 1271 Avenue of the Americas; and 1 Columbus Circle, among others.


Lower Manhattan witnessed a 26.8 percent increase in Class A vacancy rates and a 12.5 percent boost in overall vacancy rates in the second quarter of 2017. Much of the growth in Class A vacancy rates was driven by new space at 3 World Trade Center being added to the office inventory this quarter. Downtown was also impacted by a slowdown in leasing at midyear 2017 that followed a stellar first quarter. Just three months ago, the submarket recorded deal volume that was 44 percent higher than the quarterly average Lower Manhattan has posted since 2007.

Demand among large users has been nearly exclusive to Class A product. Out of the 11 large Downtown leases signed year-to-date, all but two took place in Class A buildings, and eight of the 11 were signed in trophy-quality assets.

Lower Manhattan posted a 9.4% increase in overall asking rents quarter-over-quarter, mostly due to 1.7 million square feet of availability at the soon to be completed 3 World Trade Center. If the under-construction trophy tower was removed from rent calculations, asking rents in the submarket would have seen a more moderate growth of 0.9%.

Midtown South

Non-TAMI firms continued to ink the biggest leases in Midtown South at midyear 2017, a trend that began earlier this year. Tech leasing activity in the submarket continued, but on a much smaller scale when compared to other industries, with Google as the lone exception. The tech giant, already the largest tenant in the Meatpacking District, expanded at 85 Tenth Avenue by 60,000 square feet, bringing its presence to 240,000 square feet. In the second quarter to date, tech leasing activity totaled 142,397 square feet, only 17 percent of all leasing activity for Midtown South.

Strong activity fueled improving fundamentals in Midtown South, with overall and Class A vacancy dropping 2.4 percent and 7.4 percent, respectively, from the first quarter of 2017. Chelsea recorded a strong second quarter, with several large leases signed, bringing its Class A vacancy rate down to 9.5 percent from the previous quarter.

Overall asking rental rates for Midtown South office space barely changed this quarter at $76.66, while continued healthy leasing activity pushed up Class A rents by more than a dollar to $84.51 per square foot in the first quarter of the year.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 2,400 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2016, the New York tri-state team completed approximately 28.2 million square feet of lease transactions; arranged investment sales, notes, debt and equity transactions valued at more than $12.0 billion; managed projects valued at $7.9 billion; and oversaw a property management, facilities management and agency leasing portfolio exceeding 146.7 million square feet.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit